Hopes that the renewables industry will power a jobs boom in Scotland are fading fast amid fresh signs oil giants are losing interest in key projects

Energy giants have accelerated their retreat from the offshore wind market in moves that leave the SNP Government facing challenges on multiple fronts.

First Minister John Swinney has made the claim that renewables can fuel prosperity in Scotland a key element of the case for independence in his campaigning for the coming Scottish Parliament elections.

However, BP has become the latest oil and gas major to make clear that while it sees lots of value in hydrocarbons its belief in the potential of offshore wind in the UK as a business opportunity has faded.

The company slashed the valuation of its offshore wind interests in its fourth quarter results last week after a partner withdrew from two key projects in the UK.

With chief financial officer Kate Thomson telling analysts that BP had gone too far, too fast in its drive into the low carbon energy space, the move raised big questions about the future of the company’s plans to develop a significant renewables business in Scotland.

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It came as the SNP Government pulled the funding for the body that was meant to help Scotland grow into the marine energy powerhouse that former first minister Alex Salmond insisted it could become.

The decision to cut Wave Energy Scotland adrift amounted to an admission that claims about the potential of wave power had been greatly exaggerated.

After years of SNP Government-funded development work, none of the companies working in the sector have been able to demonstrate that they can harness the waves off Scotland to generate meaningful amounts of power at affordable prices.

The loss of interest in offshore wind on the part of oil and gas firms is a more serious problem for Mr Swinney because the technology was always seen as having the greatest potential in terms of power generation and the related economic impact.

A report produced for Scottish Enterprise in 2010 forecast that offshore wind firms would create 28,000 jobs within 10 years.

While the SNP Government does not have up to date numbers on jobs, research by academics at Strathclyde University’s Fraser of Allander Institute suggested only 15,000 jobs were supported by the offshore wind sector in 2021.

The update from BP will stoke fears that predictions the landmark ScotWind licensing round which was launched that year would power a dramatic increase in activity were misplaced.

BP was one of a number of oil and gas giants that bid successfully for acreage in the ScotWind round, which the SNP Government predicted would generate supply chain activity worth billions of pounds.

After it was awarded a lease in partnership with German utility EnBW, BP helped to fuel the hype about ScotWind.

In 2022, the companies declared: “The signing of the Option to Lease Agreement reaffirms our commitments to Scotland. We’ll support the build out of infrastructure, including ports, harbours and shipbuilding in Scotland. Make Aberdeen our hub for remote operating control of the joint UK portfolio and bp’s global operations and maintenance centre of excellence for offshore wind to generate new jobs and accelerate a just transition.”

The firms held out the prospect that the Morven windfarm they planned to develop east of Aberdeen would generate enough electricity to power three million homes and £1.1bn work for the Scottish supply chain.

However, four years later the firms appear to have completed only a limited amount of preparatory work on the project. The last update from the project team issued in November noted it was still in the community consultation process.

The prospect of Morven securing the huge amounts of capital required looks remote following big changes at both firms.

When the ScotWind round was completed BP was led by Bernard Looney who took the firm on an enthusiastic drive into the low carbon energy sector in support of the global drive to cut emissions.

Since Mr Looney departed in September 2023 BP has been run by executives who believe the company should focus on oil and gas and limit investment in low carbon energy to projects that look like sure fire winners.

The company put its offshore wind interests into a joint venture with Jera of Japan in a move intended to help limit the capital it would need to invest in projects.

Mr Looney’s successor Murray Auchincloss was ousted in December after new chairman Albert Manifold reportedly decided he had not moved either far or fast enough to return BP to its roots.

BP started production from the Murlach field east of Aberdeen last year. The field is linked to the ETAP production facility. (Image: BP)

Interim chief executive Carol Howie told analysts last week that BP would be keeping a very tight rein on spending on renewables.

She was speaking after being asked how BP would respond to the fact that EnBW had decided to withdraw from the Mona and Morgan windfarm projects the firms were working on in the Irish Sea off England.

EnBW made the decision after Mona and Morgan were snubbed in the latest round of the subsidy programme run by the UK Government to encourage investment in offshore wind.

The company’s decision was embarrassing for UK energy minister Ed Miliband, who has also made extravagant claims about the potential for renewables to boost the economy. It provided a further indication that energy firms will only commit to developments if they are guaranteed generous official funding support for them. The costs of current subsidy programmes are added to household energy bills.

Ms Howie made clear that BP would be unlikely to help make up for the withdrawal of EnBW from the projects.

She said: “we're not looking at any increase or update in terms of what we said previously with regard to capital allocation.”

EnBW said it will continue working on Morven but noted that its current focus is on windfarms off Germany.

What makes the changes at BP and EnBW so worrying for the SNP Government is that they come soon after other heavyweights cooled on important windfarm projects off Scotland.

In November Shell pulled out of the pioneering CampionWind floating wind development amid concerns about the related economics.

Two months later TotalEnergies and partners put plans for the giant West of Orkney windfarm on hold for cost reasons.

Those looking for crumbs of comfort for Scotland may be glad the North Sea still contains significant reserves of oil and gas.

The Scot who heads BP’s oil and gas production arm, Gordon Birrell, has highlighted the potential of the huge Clair field West of Shetland, where other firms see scope to make significant finds.

But with the current governments in Edinburgh and Westminster opposed to further North Sea exploration big fish and minnows alike are shifting their attention to other countries.

© Herald Scotland